Thursday, December 12, 2019

My Take-Aways from the 2019 NJCFE Symposium

I recently attended the 2019 New Jersey Coalition for Financial Education (NJCFE) Symposium. Below are some key take-aways about personal finance topics and financial education:

¨     Financial author Beth Kobliner recommended that parents have “college conversations” early on with their children to set realistic expectations and avoid disappointment in the college selection process. A student’s total debt load should be no more than their first year salary. On average, people will earn $1 million more during their lifetime if they graduate from college with a four-year degree.

¨     Kobliner also noted that people spend about twice as much with plastic than cash. The less “physical” a spending experience is (e.g., using Apple Pay or Google Pay for purchases instead of taking money out of a wallet and paying with cash), the less pain people feel so they buy more and think they got a good deal.

¨     Both Kobliner and Arindam Nag, co-founder and chief executive of CentSai, an online financial education platform, noted the importance of conversations and stories in teaching personal finance concepts. Nag noted that stories should focus on people’s “pain points.” Examples include financial hardship, the high cost of living, and career changes.

¨     NJCFE board member David Vinokurov noted that Social Security will be 85 years old in 2020. It started in 1935 under President Franklin Roosevelt. Social Security benefits are based on a person’s best 35 years of career earnings and full retirement benefits are available at age 66 to 67, depending on your year of birth.

¨     Financial journalist Jonathan Clements noted that behavior change is hard. People know they should save more, but it is hard to do. Knowledge is not enough. What can help people save is removing temptations to spend, making public commitments (so there is accountability), tracking progress, and creating sympathy for your “future self” so you are willing to make sacrifices today.

¨     Another success strategy that Clements mentioned is “habit stacking,” i.e., incorporating a desired behavior into something that you already do. A health-related example is going to a gym on the way to work. A financial example is dropping loose change into a jar when you walk in the door from work or doing errands.

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